RURAL CREDITS ?21 



wealth of the new West, eastern and European capitalists made loans 

 altogether too freely and often on the security of land practical! > 

 worthless or located in regions of uncertain crops. The upward 

 movement culminated in the early 'go's; grain farming reached its 

 climax and over-production brought the inevitable fall of prices and 

 of land values. 



Farmers now began to feel the burden of their great mortgage 

 indebtedness, which had grown enormously during the preceding 

 decade and which had been incurred largely for unproductive pur- 

 poses. Many could not pay their interest, and as it often happened 

 that the selling price was less than the amount of the mortgage, fore- 

 closures were common. This collapse caused widespread discontent 

 among the farmers and a total mortgage indebtedness of farms oper- 

 ated by their owners estimated at $1,085,995,960, in 1890. 



The census of 1900 did not secure data on farm indebtedness, but 

 the census of 1910 secured information regarding the amount of 

 mortgage indebtedness on farms operated by their owners. The 

 result was a total debt of $2,293,000,000 no per cent greater than 

 the debt of similar farms in 1890. When land values increase, owner- 

 ship becomes more difficult, and the increase of mortgage indebtedness 

 is inevitable. During the period 1890-1910 the value of land and its 

 improvements for the country as a whole increased 100 per cent, and 

 this, coupled with frequency of land transfers, resulted in a great 

 increase of mortgage indebtedness. 



The farmer has also made heavy expenditures to raise his standard 

 of living and has spent large sums on improvements and equipment 

 and in working capital. The value of buildings shows an increase 

 of 77 .8 per cent from 1900 to 1910. During the same decade value 

 of implements and machinery increased 68.7 per cent, while the 

 expenditure for labor increased 82 .3 per cent, and that for fertilizer, 

 115 per cent. These increased expenditures for equipment and opera- 

 tion are the result of the normal development of agriculture, since 

 they arise out of a growing necessity for greater intensity of culti- 

 vation. Animals are of better quality and require better housing. 

 More thorough cultivation calls for a larger expenditure for labor or 

 increased employment of machinery. Declining soil fertility may 

 force the farmer to resort to artificial fertilizer. It is possible that 

 these added items of expense may not be reflected in increased produc- 

 tion and must, therefore, be wholly met out of an increase in prices. 

 But should such an increase in prices not take place, the additional 



